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When Barack Obama started his Presidency, there was much
discussion of how Sweden in the early 1990s had briefly
nationalized and then sold off its failing banks and quickly
restored its economy, while Japan had instead bailed out its
failed banks’ stockholders and bondholders, and never recovered.
Why is the United States copying the Japanese failure, instead of
the Swedish success?

President Obama started his Presidency with the opportunity to
try the Swedish solution. This would have been a temporary
nationalization of the bad giants of American finance — Wall
Street (including AIG), Bank of America, and maybe Wells Fargo –
a public seizure including their toxic speculative assets, as
part of a program then to sell those off and to prosecute any
frauds that had been perpetrated in the production and marketing
of those toxic assets, which had crashed the U.S. economy and
caused so much hurt to the nation.

Bush had already bailed these financial firms out with taxpayer
cash, but Obama needed yet to determine what he’d do: Would he
turn those bailouts into temporary ownership and control of those
firms, like Sweden had done in 1992, kick out their existing
stockholders and even some bondholders, like Sweden had done,
imprison the fraud-mongering executives, and say to the
aristocrats who had invested in them, as Sweden had done, “Tough
luck, you had invested in a mismanaged company, which went
insolvent? We’re now taking over.” Or would he instead do the
bidding of the bonus-engorged executives, and of the aristocrats
who held those stocks and bonds, in those financial giants; would
he now hold these aristocrats harmless, by transferring their
losses onto future U.S. taxpayers, like Japan had done with its
1990’s financial crisis — and which path had terminated Japan’s
period of growth into global economic prominence, and produced
Japan’s subsequent stagnation?

On 10 February 2009, Paul.Kedrosky.comheadlined “Obama On Bank
Nationalization: Too Many Banks/Republicans,” and Mr. Kedrosky
presented transcript excerpts from that night’s ABC News
“Nightline” (“Obama: No ‘Easy Out’ for Wall Street”) in which
Terry Moran asked the new President: “There are a lot of
economists who look at these banks and they say all that garbage
that’s in them renders them essentially insolvent. Why not just
nationalize the banks?” Moran was, in effect, asking the new
President to indicate whether he’d do as Sweden had done, or
instead as Japan had done. Obama chose the Japanese model, and
Kedrosky was shocked at this, and he pointed out the inadequacy
of Obama’s explanation for his choice.

Obama answered this question from Moran by saying, “Well, you
know, it’s interesting. There are two countries who have gone
through some big financial crises over the last decade or two.
One was Japan, which never really acknowledged the scale and
magnitude of the problems in their banking system, and that
resulted in what’s called ‘the lost decade.’ They kept on trying
to paper over the problems. The markets sort of stayed up,
because the government kept on pumping [taxpayer] money in. But,
eventually, nothing happened and they didn’t see any growth
whatsoever. Sweden, on the other hand, had a problem like this.
They took over the banks, nationalized them, got rid of the bad
assets, resold the banks and, a couple of years later, they were
going again.”

All of this was exactly true, a good summary of what happened,
and if Obama had been both honest and intelligent – and not a
psychopath – he’d have proceeded then to use this extremely
important information as the basis for what he’d do in the huge
crisis left him by Bush, since he acknowledged that this path
would be the best for the country; but, instead, he now went into
a sequence of transparent obfuscations, to turn away from it.
Kedrosky lambasted him here, by noting, “All this talk of
‘culture’, ‘traditions’, and so on are an opaque way of saying
that Democrats are [no: that Obama is] terrified of
nationalization because they [no: he] worry
[worries] about Republican name-calling.”

Here was this new President’s grand opportunity to take advantage
of the nation’s disgust with eight disastrous years of
Bush/Republican corruption and serving the aristocracy at the
public’s expense. And Obama completely and shockingly muffed the
opportunity.

He said now: “So you’d think looking at it, Sweden looks like a
good model. Here’s the problem:” and he named two: culture
(Sweden’s being democratic socialist, versus America’s being what
— fascist?), and scale (Sweden’s being a smaller
country than the U.S. – as if Japan wasn’t also, and as if scale
had anything to do with it anyway, which it didn’t).

Kedrosky pointed out the fraudulence of both of Obama’s
arguments, and he closed by observing: “Muddying the issue by
saying that we would need to nationalize ‘thousands of banks’
isn’t helpful.” Bill McBride at calculatedriskblog.combannered “Obama on
Nationalization,” and he included the February 10th commentary by
Nouriel Roubini, the economist who had predicted the financial
collapse. Roubini summarized there what he understood to be the
advice that President Obama was receiving from his top economic
advisors (Larry Summers and Tim Geithner), which led Obama to
think that he should copy Japan. Roubini expected that Obama
would probably reverse himself on this after “6-12 months.” It
didn’t happen. Nobody (except perhaps a few extreme Republicans,
on purely imaginary grounds) could yet think that Obama was a
psychopath, but that’s what he finally turned out to be:
Roubini’s expectation for Obama to do what’s best for the country
was dashed.

Sweden had let the wealth of some aristocrats (the main holders
of stocks and bonds in the failed banks) plunge, rather than
transfer onto future taxpayers (the general Swedish public) those
individuals’ losses; and so the entire Swedish economy quickly
recovered. As Lars Jonung in February 2009 wrote for the European
Commissionsummarizing the Swedish experience, “The
aim was to save the banks – not the owners of the banks. By
forcing owners of banks to absorb losses, public acceptance of
the bank resolution was fostered. In this way, taxpayers were
likely to feel that the policy was fair and just.” Japan instead
bailed out their aristocrats; and the economy never recovered.
Obama knew all about it, and yet he chose the Japanese approach.

This didn’t make sense unless Obama was a psychopath, but it was
far too early in his Presidency for anyone to be able to draw
such a conclusion rationally yet: such a conclusion seemed too
bizarre to be an accurate reading of the man, since his
Presidency was then just starting.

However, there were also Obama’s other related failures, such as
his refusal to prosecute even a single mega-bank executive for
the financial frauds that had brought the American economy down.

These had been serious crimes. For example, Shahien Nasiripour,
at huffingtonpost, bannered, on 16 May 2011, “Confidential
Federal Audits Accuse Five Biggest Mortgage Firms Of Defrauding
Taxpayers,” and he reported that the Inspector General of the
U.S. Department of Housing and Urban Development had carried out
audits of Bank of America, JPMorgan Chase, Citigroup, Wells
Fargo, and Ally Financial, and found, in each case, that they had
swindled the Federal Government. “The internal watchdog office at
HUD referred its findings to the Department of Justice, which
must now decide whether to file charges” under “the False Claims
Act, a Civil War-era law crafted as a weapon against firms that
swindle the government.” All of “the audits conclude that the
banks effectively cheated taxpayers by presenting the Federal
Housing Administration with false claims: They filed for federal
reimbursement on foreclosed homes ... using defective and faulty
documents.” Yet again – as with Goldman’s Lloyd Blankfein, and
with the Republican former Senator John Ensign – the Obama
“Justice” Department was being challenged to prosecute banksters
and conservative politicians. Nearly three years into his
Presidency, Obama hadn’t yet pursued even a single one of them.
(He would prosecute only Democratic politicians, such as former
Senator John Edwards, and former Governor Don Siegelman.)

Bloomberg News headlined on 1 June 2011, “Analyst: Goldman ‘Too
Big’ to Face Prosecution,” and quoted Wall Street’s most highly
regarded bank analyst, Brad Hintz of Sanford C. Bernstein &
Co., as claiming that none of the mega-banks could be criminally
prosecuted, because criminally convicting a mega-bank would
destroy the entire economy. (This assertion was false, but Hintz
was himself a Wall-Streeter. His audience were Wall-Streeters.)
Furthermore, he said that there would always be the assumption
that any such bank would be an “offender that can be reformed,”
and that therefore it shouldn’t be prosecuted. Hintz also assumed
that no mega-bank top executive would be criminally prosecuted –
that the only penalty feasible for any such lawbreaking would be
a fine that’s paid by the company and taken out of stockholders’
profits – not out of any executive’s compensation, much less by
any imprisonment: no criminal prosecution whatsoever. In other
words: Hintz was saying that criminal accountability was only for
everyone else, not for the financial
aristocrats.

This corrupt theme was ultimately confirmed as Presidential
policy, in September 2011, when Ron Suskind’s Confidence
Menbecame published, exposing the Obama Administration,
supposedly led by the evil Timothy Geithner at the head of most
of its men, versus Sheila Bair and all of its women (especially
Mary Schapiro, Christina Romer, Elizabeth Warren and Senator
Maria Cantwell), and with Geithner finally winning the President
and so deciding the game – as if the President hadn’t actually
been the key figure all along.

Suskind reported that in late February of 2009, Summers “joined
Romer in support of the president’s belief that a major federal
intervention into the banking system was now needed. Geithner
pushed back. ‘The confidence in the system is so fragile still,’
he said. ‘The trust is gone. One poor earnings report, a
disclosure of a fraud, or a loss of faith in the dealings between
one large bank and another – a withdrawal of funds or refusal to
clear trades – and it could result in a run, just like Lehman.’”

Geithner was there saying that only two choices for mega-bank
policy existed: doing nothing, as in the Lehman case, or else
doing what George W. Bush and Hank Paulson had done – the
bailouts etc. Geithner was ignoring what Sweden had done, even
though the Swedish model had restored the Swedish economy
quickly; Geithner was, in effect, pretending that Bush had done a
Sweden, which wasn’t the case at all.

Supposedly, the President was fooled by this ridiculous Geithner
ploy. Suskind reported that Obama finally (supposedly)
reluctantly came around to Geithner’s side when Geithner
convinced him that “many of the president’s desires for action
[on the banks] could find a home, at much lower costs, in his
‘stress tests’ ... which Summers and Romer doubted would be
credible” (since the balance sheets of the banks had been rigged
to count the toxic assets at full value, which fakery everyone in
Washington knew about).

This was repeating the Japanese model, which everyone knew had
failed. Suskind portrayed Barack Obama as being not an elitist
who had knowingly selected a bunch of plutocratic operatives for
the top of his various agencies (Treasury, Justice, etc.), but as
just a fool, who somehow became manipulated by his worst
aristocratic operative of them all: Geithner. In Suskind’s
account, Geithner was Obama’s fall-guy – Suskind pretended that
Geithner was ultimately to blame.

Suskind’s account is not credible in this regard. Barack Obama
may be many things, but he’s no fool. The fool in Suskind’s
report was Suskind himself, for his laying the blame upon Obama’s
team, rather than upon the man who chose and led it: Barack
Obama.

However, Suskind’s quotations from those people are entirely
believable, because they’re in accord with all of the other
reliable evidence. Obama clearly was more concerned to prevent
Bush’s economic collapse from continuing even just temporarily,
than he was to fix the underlying conditions that had caused it
and that could be effectively addressed only if that plunge
weren’t interrupted by such extend-and-pretend holding-actions as
Obama employed (such as his allowing the banks to hold toxic
assets on their books at full value).

Obama thus pursued policies that left the United States in
permanently weakened condition, by his, essentially, whoring to
the aristocracy. This is inescapable reality, which the liberal
Suskind refused even to consider in his book. Obama was a
conservative in his actions, but a hypocritical liberal in his
speeches. Suskind believed his speeches, and ignored his actions
– such as Obama’s having hired Geithner to begin with.

Aptly, on 21 July 2012, washingtonsblog bannered “Failing to
Break Up the Big Banks Is Destroying America.” This article
documented that Obama was completing the aristocratic rape of the
country that Bush had begun.

Consequently, under Obama, the stock markets boomed, while
employment and wages continued sinking.

The aristocracy weren’t hurt; only the workers were. This was
Republican government, under a “Democratic” name.

The only way the Republican Party could respond to this was by
going even farther to the right, which they did: Romney draws the
aristocracy’s support only by being significantly to the right of
Obama; otherwise he wouldn’t stand any chance at all. Welcome,
then, to America’s fascist Party – America’s formerly merely
conservative Republican Party.

And this is how it came to be that the U.S. must now choose
between a conservative “Democrat” and a fascist Republican, and
that the winner (whoever it may be) will be presiding over a
robbed and raped country.